Supply Chain Contract Coordination in Retailer Equity Buybacks

This study examines how retailer share repurchases interact with supply chain contract design in expanding markets, focusing on retailers’ market development efforts, suppliers’ pricing strategies, and the choice between wholesale price and revenue-sharing contracts. We construct a supply chain contract model incorporating a retailer’s share repurchases, incentive-compatible mechanisms, market expansion, and control premium costs. We compare wholesale price and revenue-sharing contracts to evaluate their effects on risk–reward allocation and upstream–downstream coordination. Share repurchases can reduce agency conflicts and make retailers’ market-expansion commitments more observable. However, they may also generate control premium costs and weaken channel coordination. Revenue-sharing contracts linked to retailer share repurchases can align the interests of original shareholders, private equity institutions, and suppliers while mitigating control premium effects and tunneling incentives. Retailer share repurchases are not merely capital-market transactions; their supply chain value depends on whether buyback-induced financial incentives can be translated into coordinated pricing, effort, and operational decisions. Retailers should align repurchase decisions with market development and ordering strategies. Suppliers can use revenue-sharing contracts to balance pricing incentives and downstream revenue allocation. Private equity institutions should calibrate governance mechanisms to support collaborative operations rather than excessive ownership-based control.